To acquire a portfolio of retail banking assets our client needed the ability to assess different combinations of assets, with funding options and the required capital, within set liquidity constraints. Our client was an investment vehicle set up to acquire a portfolio of assets and as a start-up would be subject to tougher regulatory requirements than its competitors in the market and bidding process.
Understanding the viability of the package on offer versus modifying the package was vital in determining whether to bid and then for what and how much, as well as it was crucial to convince debt and equity investors to fund the transaction.
In this context, capital and liquidity requirements, which directly affect returns on investment, uncertainty around eventual composition of the package of assets and interdependencies between back books, front books and target operating mode were major challenges.
We provided value added services by offering a single controlled structure able to evaluate myriad choices on a consistent basis and hands-on support to a small management team, as well as deploying a team with regulatory, tax and operational expertise.
The major outcomes for our client were:
- More informed negotiating position
- Clear understanding of capital required for the portfolio of assets
- Ability to sensitise for different operating models and associated cost base
- Initial strong basis for regulatory applications